Question

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders

Date	Amount Rs
Dec.21, 2005	1,000
Dec.26, 2005	1,200
Dec.18, 2005	2,000
Dec.31, 2005	5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2005 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2005 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2005 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs 1,900. On 25.1.2006 Bansal Traders sent the promissory note drawn on Dec. 31, 2005 to their bank for collection. All the promissory notes were met by Mohan Trade Rs Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Trade Rs

Answer 1

Books of Bansal Traders
Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2005
Dec.21	Mohan Traders			Dr.			900
			To Sales A/c					900
	(Goods sold to Mohan Traders list price Rs 1,000 at 10% trade discount)
Dec.21	Bills Receivable A/c			Dr.			900
			To Mohan Traders					900
	(Promissory Note received from Mohan Traders payable after 30 days)
Dec.26	Mohan Traders			Dr.			1,080
			To Sales A/c					1,080
	(Goods sold to Mohan Traders list price Rs 1,200 at 10% trade discount)
Dec.26	Bills Receivable A/c			Dr.			1,080
			To Mohan Traders					1,080
	(Promissory Note received from Mohan Traders)
Dec.26	Bank A/c				Dr.		1,071
	Discount A/c				Dr.		9
			To Bills Receivable A/c					1,080
	(Promissory Note discounted with the Bank at 12% p.a.)
Dec.28	Mohan Traders A/c				Dr.		1,800
			To Sales A/c					1,800
	(Goods sold to Mohan Traders list price Rs 2,000 at 10% trade discount)
Dec.28	Bills Receivable A/c			Dr.			1,800
			To Mohan Traders A/c					1,800
	(Promissory Note received from Mohan Traders)
Dec.28	Dream Soaps A/c			Dr.			1,900
			To Bills Receivable A/c					1,800
			To Discount Received A/c					100
	(Promissory Note of Rs 1,800 sent to Dream Soap in full settlement of amount due to him)
Dec.31	Mohan Traders			Dr.			4,500
			To Sales A/c					4,500
	(Goods sold to Mohan trades list price Rs 5,000 at 10% trade discount)
Dec.31	Bills Receivable A/c			Dr.			4,500
			To Mohan Traders					4,500
	(Promissory Note received from Mohan Traders)
2006
Jan.23	Cash A/c			Dr.			900
			To Bills Receivable A/c					900
	(Promissory Note issued on Dec. 21, 2005 was met on maturity)
Jan.25	Bill Sent for collection A/c			Dr.			4,500
			To Bills Receivable A/c					4,500
	(Promissory Note issued on Dec. 31, 2005 sent to bank for collection)
Feb.02	Bank A/c			Dr.			4,500
			To Bill Sent for Collection A/c					4,500
	(Bank got payment of bill sent for collection on due date)

Ledger
Mohan Traders
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.		Amount Rs
2005				2005
Dec.21	Sales		900	Dec.21	Bills Receivable			900
Dec.26	Sales		1,080	Dec.26	Bills Receivable			1,080
Dec.28	Sales		1,800	Dec.28	Bills Receivable			1,800
Dec.31	Sales		4,500	Dec.31	Bills Receivable			4,500
			8,280					8,280

Books of Mohan Traders

Journal

Date

Particulars

L.F.

Debit Amount Rs

Credit Amount Rs

2005

Dec.21

Purchases A/c

Dr.

900

To Bansal Traders

900

(Goods bought from Bansal Traders list price Rs 1,000 at 10% trade discount)

Dec.21

Bansal Trader

Dr.

900

To Bills Payable A/c

900

(Promissory Note issued to Bansal Traders for Rs 900 payable after 30 days)

Dec.26

Purchases A/c

Dr.

1,080

To Bansal Traders

1,080

(Goods bought from Bansal Traders list price Rs 1,200 at 10% Trade discount)

Dec.26

Bansal Traders

Dr.

1,080

To Bills Payable A/c

1,080

(Promissory Note issued from Bansal Traders payable after 30 days)

Dec.28

Purchases A/c

Dr.

1,800

To Bansal Traders

1,800

(Goods bought from Bansal Traders list price Rs 2,000 at 10% trade discount)

Dec.28

Bansal Traders

Dr.

1,800

To Bills Payable A/c

1,800

(Promissory Note issued to Bansal Traders payable after 30 days)

Dec.31

Purchases A/c

Dr.

4,500

To Bansal Traders

4,500

(Goods bought from Bansal Traders of list price Rs 5,000 at 10% trade discount)

Dec.31

Bansal Traders

Dr.

4,500

To Bills Payable A/c

4,500

(Promissory Note issued to Bansal Traders payable after 30 days)

2006

Jan.23

Bills Payable A/c

Dr.

900

To Cash A/c

900

(The first Promissory Note discharged on its due date)

Jan.28

Bills Payable A/c

Dr.

1,080

To Bank A/c

1,080

(The second Promissory Note discharged on its due date)

Jan.30

Bills Payable A/c

Dr.

1,800

To Cash A/c

1,800

(The third Promissory Note discharged by paying Rs 1,800 to Dream Soaps)

Feb.02

Bills Payable A/c

Dr.

4,500

To Bank A/c

4,500

(The fourth Promissory Note discharged by paying Rs 4,500 to Bank)

Ledger
Bansal Traders
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2005				2005
Dec.21	Bills Payable		900	Dec.21	Purchases		900
Dec.26	Bills Payable		1,080	Dec.26	Purchases		1,080
Dec.28	Bills Payable		1,800	Dec.28	Purchases		1,800
Dec.31	Bills Payable		4,500	Dec.31	Purchases		4,500
			8,280				8,280